Economics 9708 · AS & A Level · Government intervention in markets

Government intervention in markets — practice question

A government is expanding the influence of market forces within its economy. Yet it has introduced temporary maximum price controls. Why could a government that is committed to cutting back central planning bring in price controls?

  • Ato increase allocative efficiency
  • Bto increase the incentive for producers to raise supply
  • Cto reduce consumer demand
  • Dto reduce expectations of inflation

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